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GAP informs the market about Compañía Mexicana de Aviación, S.A. de .C.V.’S insolvency petition

Direct News Source

04-Aug-2010 Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE: PAC; BMV: GAP) (“the Company” or “GAP”) announces that Compañía Mexicana de Aviación, S.A. de C.V. (“CMA”) today informed the public via its corporate blog www.sigamosvolando.com, as well as through other means of communication, that it has filed an insolvency petition to align its cost structure with current industry conditions.

In a press release dated August 3, 2010, CMA indicated that on August 2, 2010, it filed an insolvency petition with a district judge in Mexico City seeking to restructure its costs and ensure the company's viability. Insolvency Proceedings are a recourse established under Mexican Law to preserve businesses and to avoid non-compliance of financial obligations that may put the viability of these companies as well as that of those companies with which it has business relations at risk.

In addition, CMA announced the following:

  • Insolvency proceedings will allow CMA to restructure its liabilities in an orderly fashion and align its cost structure, especially labor costs, to current industry conditions.
  • CMA will continue operating normally in accordance with Mexican Insolvency Law.
  • CMA passengers, flights and itineraries will not be affected by the insolvency proceeding.
  • For CMA, the security of its passengers is a priority, and to this end, CMA reiterates its continued commitment to guaranteeing the integrity of its operations.
  • Only CMA has filed an insolvency petition to restructure its liabilities.
  • Mexicana Click and Link are independent of Compañía Mexicana de Aviación and consequently, of this process. Therefore, the bankruptcy proceedings will have no effect on the operations of Mexicana Click and Mexicana Link which comprise 95% of Grupo Mexicana de Aviación's domestic flights.

Currently, Grupo Mexicana de Aviación operates through its three subsidiaries, Compañía Mexicana de Aviación (Mexicana), Aerovías Caribe S.A. de C.V. (Mexicana Click) and Mexicana Inter S.A. de C.V. (Mexicana Link), at 10 of GAP's 12 airports: Guanajuato, Guadalajara, La Paz, Los Mochis, Morelia, Mexicali, Puerto Vallarta, Los Cabos, Tijuana and Manzanillo. During the first six months of 2010, Grupo Mexicana de Aviación through its different subsidiaries transported a total of 1,869,700 passengers, which is equal to 18.26% of GAP's network and represents 17.88% of GAP's domestic passengers and 18.89% of GAP's international passengers.

Collections of Passenger Charges

In order to ensure the best interests of GAP's airports, the Company will be modifying its passenger charges' collection process.

Passenger charges are fees charged by all airports for the use of the airport's facilities. Airports use revenues from passenger charges to ensure the security of passengers as well as to maintain, modernize and expand the airport's infrastructure. Generally, the airlines collect passenger charges for the airports by adding the fee to the price of passenger tickets.

The collection process will be modified to benefit the interests of the Company and those of Mexicana de Aviacion, Mexicana Click and Mexicana Link. Therefore, once the current agreements expire, passengers that purchase a ticket for any of these airlines must pay the passenger charges directly at the airport since this charge will no longer be included in the price of the ticket. The rest of the airlines that operate in the GAP network will not be affected.

It is important to mention that the passenger charges paid at the airport will remain the same as those previously charged on passenger tickets by the airlines that comprise Grupo Mexicana de Aviación.

GAP will issue a press release to announce the details of the process for the payment of the passenger charges. In order to cause the least amount of disruption to passengers, GAP will ensure that the process is efficient and fast. With this change, GAP seeks to reduce its accounts receivable from the airlines that form part of Grupo Mexicana de Aviación and to reduce the risk of nonpayment of revenues belonging to the Company, as well as guarantee the proper future development of the infrastructure of its airports.